SEC Chairman Jay Clayton confirms that Ethereum is not a security

12 Mar, 2019
by David Borman
SEC Chairman Jay Clayton confirms that Ethereum is not a security

It has been reported by Coin Center that SEC Chairman Jay Clayton has responded to a letter that asked him if he agreed with recently articulated views that Ethereum and cryptos like it do not fall under the definition of securities. The letter supports the notion that such digital assets are not considered securities.

Recently Coin Center worked together with Rep. Ted Budd to send a letter to Clayton asking if he agreed with Director of the Division of Corporate Finance William Hinman, who recently laid out in a speech that Ethereum does not qualify as a security. Now, Clayton has responded:

"Your letter also asks whether I agree with certain statements concerning digital tokens in Director Hinman's June 2018 speech. I agree that the analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inhere to the instrument. A digital asset may be offered and sold initially as a security because it meets the definition of an investment contract, but that designation may change over time if the digital asset later is offered and sold in such a way that it will no longer meet that definition. I agree with Director Hinman's explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework."

Essentially, Clayton is saying that he agrees that according to the Howey framework Ethereum and similar coins are not securities. This is a positive step forward for crypto as most coins do not wish to be labeled as securities due to the trading restrictions associated with the label.

It seems this helps to confirm that this view is official SEC policy, and is unlikely to change anytime soon. Stick with Chepicap for all your SEC regulatory updates!

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